Operations and Supply Strategy Chapter 2 Operations and Supply Strategy
OBJECTIVES Operations and Supply Strategy Competitive Dimensions 2-2 OBJECTIVES Operations and Supply Strategy Competitive Dimensions Order Qualifiers and Winners Strategy Design Process A Framework for Operations and Supply Strategy Productivity Measures 2
What is Operations and Supply Strategy? 2-3 What is Operations and Supply Strategy? Operations and supply strategy is concerned with setting broad policies and plan for using the resources of a firm to best support its long-term competitive strategy.
Increase Production Capacity Decisions on Processes 2-4 Operations Strategy Strategy Process Example Customer Needs More Product Corporate Strategy Increase Org. Size Operations Strategy Increase Production Capacity Decisions on Processes and Infrastructure Build New Factory 3
Competitive Dimensions 2-5 Competitive Dimensions Cost or Price Make the Product or Deliver the Service Cheap Quality Make a Great Product or Deliver a Great Service Delivery Speed Make the Product or Deliver the Service Quickly Delivery Reliability Deliver It When Promised Coping with Changes in Demand Change Its Volume Flexibility and New Product Introduction Speed Change It Other Product-Specific Criteria Support It 4
Dealing with Trade-offs 2-6 Dealing with Trade-offs For example, if we reduce costs by reducing product quality inspections, we might reduce product quality. For example, if we improve customer service problem solving by cross-training personnel to deal with a wider-range of problems, they may become less efficient at dealing with commonly occurring problems. Cost Quality Delivery Flexibility 5
Order Qualifiers and Winners Defined 2-7 Order Qualifiers and Winners Defined Order qualifiers are the basic criteria that permit the firms products to be considered as candidates for purchase by customers Order winners are the criteria that differentiates the products and services of one firm from another 6
Order Qualifiers and Winners Example 2-8 Order Qualifiers and Winners Example Order Qualifiers and Winners Example A brand name car can be an “order qualifier” Repair services can be “order winners” Examples: Warranty, Roadside Assistance, Leases, etc. 7
Kaplan and Norton Balanced Scorecard: Strategy Design Process 2-9 Kaplan and Norton Balanced Scorecard: Strategy Design Process Strategy Map What it is about! Financial Perspective Improve Shareholder Value Customer Perspective Customer Value Proposition Internal Perspective Build-Increase-Achieve Learning and Growth Perspective A Motivated and Prepared Workforce 3
Operations and Supply Strategy Framework 2-10 Operations and Supply Strategy Framework
What is Productivity? Defined 2-11 What is Productivity? Defined Productivity is a common measure on how well resources are being used. In the broadest sense, it can be defined as the following ratio: Outputs Inputs
Total Measure Productivity 2-12 Total Measure Productivity Total Measure Productivity = Outputs Inputs or = Goods and services produced All resources used 17
Partial Measure Productivity 2-13 Partial Measure Productivity Partial measures of productivity = Output or Output or Output or Output Labor Capital Materials Energy 17
Multifactor Measure Productivity 2-14 Multifactor Measure Productivity Multifactor measures of productivity = Output Labor + Capital + Energy or Labor + Capital + Materials 17
Example of Productivity Measurement 2-15 Example of Productivity Measurement You have just determined that your service employees have used a total of 2400 hours of labor this week to process 560 insurance forms. Last week the same crew used only 2000 hours of labor to process 480 forms. Which productivity measure should be used? Answer: Could be classified as a Total Measure or Partial Measure. Is productivity increasing or decreasing? Answer: Last week’s productivity = 480/2000 = 0.24, and this week’s productivity is = 560/2400 = 0.23. So, productivity is decreasing slightly. 20
Answer: c. Coordination of operational goals 2-16 Question Bowl An operations and supply strategy is concerned with which of the following? Setting specific policies and plans Short-term competitive strategies Coordination of operational goals All of the above None of the above Answer: c. Coordination of operational goals 7
Answer: d. All of the above 2-17 Question Bowl Typically a strategy breaks down into what major components? Operations effectiveness Customer management Production innovation All of the above None of the above Answer: d. All of the above 7
Answer: b. An order winner 2-18 Question Bowl A criterion that differentiates the products and services of one firm from another can be which of the following? An order qualifier An order winner PWP KPI None of the above Answer: b. An order winner 7
2-19 Question Bowl A travel agency processed 240 customers on Day 1 with a staff of 12, and 360 customers the on Day 2 with a staff of 15. What can be said about the productivity shift from Day 1 to Day 2? An increase in productivity from Day 1 to Day 2 A decrease in productivity from Day 1 to Day 2 The same productivity from Day 1 to Day 2 Can not be computed from data above None of the above Answer: a. An increase in productivity from Day 1 to Day 2(Day 1 productivity = 240/12=20 Day 2 productivity = 360/15=24) 7
2-20 End of Chapter 2